This Week in Sirius XM Radio Inc (SIRI): Pandora Media Inc (P)

Things never get dull for the country’s lone satellite-radio provider. Shares of Sirius XM Radio Inc (NASDAQ:SIRI) moved lower this week, closing 3% lower to hit $3.11. The general market moved higher, so Sirius XM was bucking the positive trend.

There was more going on beyond the share-price gyrations, though:
Sirius XM Radio Inc (NASDAQ:SIRI)’s CFO raised some interesting points at an investor conference.
Lazard Capital Markets boosted its target on the satellite-radio star.
Sirius XM is activating dormant receivers to give non-subscribers a taste of March Madness.
Spotify also hit a major premium milestone, and it’s tweaking its model to challenge Pandora Media Inc (NYSE:P).

Let’s take a closer look.

Don’t Frear the reaping
CFO David Frear was a presenter at this week’s Piper Jaffray Technology, Media, and Telecommunications Conference. He offered up some upbeat insight into the media giant’s business, occasionally debunking conventional wisdom.

For starters, he said buyers of used cars with Sirius XM Radio Inc (NASDAQ:SIRI) receivers convert at the same rate as new-car buyers. That’s surprising, since one could have easily assumed that drivers turning to secondhand cars in a move to milk more value out of their purchasing dollars would seem less likely to be able to afford satellite radio.

One can always argue that older cars don’t have the same kind of high-tech toys that new cars do that make it easy to stream online radio in lieu of premium radio, but Frear had an even bigger surprise there. The conversion rate for Sirius XM has clocked in higher in cars with Bluetooth dashboard integration for seamless online streaming.

Frear was surprised at the data himself, concluding that car buyers seeking out connected cars are early adopters who are already consuming audio across different options. In other words, they’ll stream Pandora, but they still crave their Howard Stern.

Wall Street love
Lazard Capital Markets doesn’t stand still in assessing Sirius XM Radio Inc (NASDAQ:SIRI). The analyst firm lowered its price target on the shares from $2.90 to $2.70 this past summer, only to eventually move up from $3.25 to $3.50 a few months later.

Lazard’s new price target is $4. A note on Forbes indicates that the boost is tied to expectations that the company will convert some of its debt to equity. Such a move would be dilutive to a company with more than 6.6 billion shares fully diluted outstanding, but cleaning up its balance sheet would lower its interest expense exposure, which clocked in at $265.3 million last year alone.